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PBCom v. Spouses Go, G.R. No. 175514, February 14, 2011

RULE 6- KINDS OF PLEADINGS; Sec. 4. Answer; See: Rule 8, Sec. 10; Rule 16, Sec. 6

FACTS:

Go obtained a loan from PBCom totaling more than 90 Million and payable within the period of 10 years. It was secured by a promissory note and they also entered into a pledge agreement covering Go’s shares of stocks in Ever Gotesco mall.

Two years later, however, the market value of the said shares of stock plunged to less than P0.04 per share. Thus, PBCom, as pledgee, notified Go in writing on June 15, 2001, that it was renouncing the pledge agreements.

ORIGINAL CASE FILED: complaint for sum of money with prayer for a writ of preliminary attachment

 

WHO: PBCom

 

AGAINST

WHOM:

Go

and

his

wife,

Elvy

T.

Go

WHERE: Regional Trial Court

 

PBCom alleged that Spouses Go defaulted on the two (2) promissory notes, having paid only three (3) installments on interest payments, consequently, the entire balance of the obligations of Go became immediately due and demandable.

Go, in his Answer with Counterclaim denied the material allegations in the complaint and stated that:

8. The promissory note referred to in the complaint expressly state that the loan obligation is payable within the period of ten (10) years. Thus, from the execution date of September 30, 1999, its due date falls on September 30, 2009 (and not 2001 as erroneously stated in the complaint). Thus, prior to September 30, 2009, the loan obligations cannot be deemed due and demandable.

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. (Article 1181, New Civil Code)

9. Contrary to the plaintiff’s proferrence, defendant Jose C. Go had made substantial payments in terms of his monthly payments. There is, therefore, a need to do some accounting works (sic) to reconcile the records of both parties.

10. While demand is a necessary requirement to consider the defendant to be in delay/default, such has not been complied with by the plaintiff since the former is not aware of any demand made to him by the latter for the settlement of the whole obligation.

On September 28, 2001, PBCom filed a verified motion for summary judgment anchored on the following grounds:

MATERIAL AVERMENTS OF THE COMPLAINT ADMITTED BY DEFENDANT-SPOUSES IN THEIR ANSWER TO OBVIATE THE NECESSITY OF TRIAL

II. NO REAL DEFENSES AND NO GENUINE ISSUES AS TO ANY MATERIAL FACT WERE TENDERED BY THE DEFENDANT-SPOUSES IN THEIR ANSWER

III. PLANTIFF’S CAUSES OF ACTIONS ARE SUPPORTED BY VOLUNTARY ADMISSIONS AND AUTHENTIC DOCUMENTS WHICH MAY NOT BE CONTRADICTED

PBCom contended that the Answer interposed no specific denials on the material averments in paragraphs 8 to 11 of the complaint such as the fact of default, the entire amount being already due and demandable by reason of default, and the fact that the bank had made repeated demands for the payment of the obligations

RTC Ruling

The RTC granted the motion for summary judgment and rendered judgment in favor of PBCom.

RULING OF THE COURT OF APPEALS

In its Decision dated July 28, 2006, the CA reversed and set aside the assailed judgment of the RTC, denied PBCom’s motion for summary judgment, and ordered the remand of the records to the court of origin for trial on the merits.

The CA could not agree with the conclusion of the RTC that Spouses Go admitted paragraphs 3, 4 and 7 of the complaint. It found the supposed admission to be insufficient to justify a rendition of summary judgment in the case for sum of money, since there were other allegations and defenses put up by Spouses Go in their Answer which raised genuine issues on the material facts in the action.

The CA agreed with Spouses Go that paragraphs 3 and 4 of the complaint merely dwelt on the fact that a contract of loan was entered into by the parties, while paragraph 7 simply emphasized the terms of the promissory notes executed by Go in favor of PBCom. The fact of default, the amount of the outstanding obligation, and the existence of a prior demand, which were all material to PBCom’s claim, were “hardly admitted” by Spouses Go in their Answer and were, in fact, effectively questioned in the other allegations in the Answer.

PBCom’s motion for reconsideration was denied in a resolution dated November 27, 2006. Thus, this petition for review.

The CA could not agree with the conclusion of the RTC that Spouses Go admitted paragraphs 3, 4 and 7 of the complaint. It found the supposed admission to be insufficient to justify a rendition of summary judgment in the case for sum of money, since there were other allegations and defenses put up by Spouses Go in their Answer which raised genuine issues on the material facts in the action.

Petitioner PBCom’s Position: Summary judgment was proper, as there were no genuine issues raised as to any material fact. PBCom argues that the material averments in the complaint categorically admitted by Spouses Go obviated the necessity of trial. In their Answer, Spouses Go admitted the allegations in paragraphs 3 and 4 of the Complaint pertaining to the security for the loans and the due execution of the promissory notes, and those in paragraph 7 which set forth the acceleration clauses in the promissory note. Their denial of paragraph 5 of the Complaint pertaining to the Schedules of Payment for the liquidation of the two promissory notes did not constitute a specific denial required by the Rules.

Respondent spouses’ position: Summary judgment was not proper.

The core contention of Spouses Go is that summary judgment was not proper under the attendant circumstances, as there exist genuine issues with respect to the fact of default, the amount of the outstanding obligation, and the existence of prior demand, which were duly questioned in the special and affirmative defenses set forth in the Answer. Spouses Go agree with the CA that the admissions in the pleadings pertained to the highlight of the terms of the contract. Such admissions merely recognized the existence of the contract of loan and emphasized its terms and conditions. Moreover, although they admitted paragraphs 3, 4, and 7, the special and affirmative defenses contained in the Answer tendered genuine issues which could only be resolved in a full-blown trial.

On the matter of specific denial, Spouses Go posit that the Court decisions cited by PBCom do not apply on all fours in this case. Moreover, the substance of the repayment schedule was not set forth in the complaint. It, therefore, follows that the act of attaching copies to the complaint is insufficient to secure an implied admission. Assuming arguendo that it was impliedly admitted, the existence of said schedule and the promissory notes would not immediately make private respondents liable for the amount claimed by PBCom. Before respondents may be held liable, it must be established, first, that they indeed defaulted; and second, that the obligations has remained outstanding.

Spouses Go also state that although they admitted paragraphs 3, 4 and 7 of the Complaint, the fact of default, the amount of outstanding obligation and the existence of prior demand were fully questioned in the special and affirmative defenses.

ISSUE: WON summary judgment was proper

HELD:

The Court agrees with the CA that “[t]he supposed admission of defendants-appellants on the x x x allegations in the complaint is clearly not sufficient to justify the rendition of summary judgment in the case for sum of money, considering that there are other allegations embodied and defenses raised by the defendants-appellants in their answer which raise a genuine issue as to the material facts in the action.”

The CA correctly ruled that there exist genuine issues as to three material facts, which have to be addressed during trial: first, the fact of default; second, the amount of the outstanding obligation, and third, the existence of prior demand.

there is no genuine issue as to any material fact, and that the moving party is entitled to a judgment as a

matter of law,” summary judgment may be rendered

. This rule was expounded in Asian Construction and

Development Corporation v. Philippine Commercial International Bank, 38] where it was written:

Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to the

Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to the amount of damages, when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law, summary judgment may be allowed. Summary or accelerated judgment is a procedural technique aimed at weeding out sham claims or defenses at an early stage of litigation thereby avoiding

the expense and loss of time involved in a trial.

sham claims or defenses at an early stage of litigation thereby avoiding the expense and loss
Under the Rules, summary judgment is appropriate when there are no genuine issues of fact

Under the Rules, summary judgment is appropriate when there are no genuine issues of fact which call for the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues, when the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the Rules must ensue as a matter of law. The determinative factor, therefore, in a motion for summary judgment, is the presence or absence of a genuine issue as to any

material fact.

therefore, in a motion for summary judgment, is the presence or absence of a genuine issue

A “genuine issue” is an issue of fact which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or question as to the facts, and summary judgment is called for. The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial. Trial courts have limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact. When the facts as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the place of

trial.

(Underscoring supplied.)

Juxtaposing the Complaint and the Answer discloses that the material facts here are not undisputed so as to call for the rendition of a summary judgment. While the denials of Spouses Go could have been phrased more strongly or more emphatically, and the Answer more coherently and logically structured in order to overthrow any shadow of doubt that such denials were indeed made, the pleadings show that they did in fact raise material issues that have to be addressed and threshed out in a full-blown trial.

PBCom anchors its arguments on the alleged implied admission by Spouses Go resulting from their failure to specifically deny the material allegations in the Complaint, citing as precedent Philippine Bank of Communications v. Court of Appeals, and Morales v. Court of Appeals.

Spouses Go, on the other hand, argue that although admissions were made in the Answer, the special and affirmative defenses contained therein tendered genuine issues.

Under the Rules, every pleading must contain, in a methodical and logical form, a plain,

Under the Rules, every pleading must contain, in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case

may be, omitting the statement of mere evidentiary facts.

the party pleading relies for his claim or defense, as the case may be, omitting the

To specifically deny a material allegation, a defendant must specify each material allegation of fact the truth of which he does not admit, and whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny only the remainder. Where a defendant

is without knowledge or information sufficient to form a belief as to the truth of a material averment

made in the complaint, he shall so state, and this shall have the effect of a denial

.

Rule 8, Section 10 of the Rules of Civil Procedure contemplates three (3) modes of specific denial, namely:

1) by specifying each material allegation of the fact in the complaint, the truth of which the defendant does not admit, and whenever practicable, setting forth the substance of the matters which he will rely upon to support his denial; (2) by specifying so much of an averment in the complaint as is true and material and denying only the remainder; (3) by stating that the defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment in the complaint, which has

the effect of a denial.

 
The purpose of requiring the defendant to make a specific denial is to make him

The purpose of requiring the defendant to make a specific denial is to make him disclose the matters alleged in the complaint which he succinctly intends to disprove at the trial, together with the matter

which he relied upon to support the denial. The parties are compelled to lay their cards on the table.

with the matter which he relied upon to support the denial. The parties are compelled to

Again, in drafting pleadings, members of the bar are enjoined to be clear and concise in their language, and to be organized and logical in their composition and structure in order to set forth their statements of fact and arguments of law in the most readily comprehensible manner possible. Failing such standard, allegations made in pleadings are not to be taken as stand-alone catchphrases in the interest of accuracy. They must be contextualized and interpreted in relation to the rest of the statements in the pleading.

In this case, as in Gaza, the admissions made by Spouses Go are to be read and taken together with the rest of the allegations made in the Answer, including the special and affirmative defenses. The portions of the pleadings referred to are juxtaposed below:

The portions of the pleadings referred to are juxtaposed below:

Complaint

8. The defendant defaulted in the payment of the obligations on the two (2) promissory notes (Annexes "A" and "B" hereof) as he has paid only three (3) installments on interests (sic) payments covering the months of September, November and December, 1999, on both promissory notes, respectively. As a consequence of the default, the entire balance due on the obligations of the defendant to plaintiff on both promissory notes immediately became due and demandable pursuant to the terms and conditions embodied in the two (2) promissory notes; 48

Answer

6. Defendants deny the allegations in paragraphs 8, 9, 10 and 11 of the Complaint;

x x x

8. The promissory notes referred to in the complaint expressly state that the loan obligation is payable within the period of ten (10) years. Thus, from the execution date of September 30, 1999, its due date falls on September 3o, 2009 (and not 2001 as erroneously stated in the complaint). Thus, prior to September 30, 2009, the loan obligations cannot be deemed due and demandable.

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the

happening of the event which constitutes the condition. (Article 1181, New Civil Code)

9. Contrary to the plaintiff’s preference, defendant Jose C. Go has made substantial payments in terms of his monthly payments. There is therefore, a need to do some accounting works (sic) just to reconcile the records of both parties.

10. While demand is a necessary requirement to

consider the defendant to be in delay/default, such has not been complied with by the plaintiff since the former is not aware of any demand made to him by the latter for the settlement of the whole obligation.

11. Undeniably, at the time the pledge of the

shares of stocks were executed, their total value is more than the amount of the loan, or at the very least, equal to it. Thus, plaintiff was fully secured insofar as its exposure is concerned. 49

12. And even assuming without conceding, that

the present value of said shares has went (sic) down, it cannot be considered as something permanent since, the prices of stocks in the market either increases (sic) or (sic) decreases depending on the market forces. Thus, it is highly speculative for the plaintiff to consider said shares to have suffered tremendous decrease in its value. Moreso (sic), it is unfair for the plaintiff to renounce or abandon the pledge agreements.

13. As aptly stated, it is not aware of any

termination of the pledge agreement initiated by the plaintiff.

Moreover, in paragraph 10 of the Answer, Spouses Go also denied the existence of prior demand alleged by PBCom in paragraph 10 of the Complaint. They stated therein that they were not aware of any demand made by PBCom for the settlement of the whole obligation. Both sections are quoted below:

Complaint

10. Plaintiff made repeated demands from (sic) defendant for the payment of the obligations which the latter acknowledged to have incurred however, defendant imposed conditions such as

Answer

10. While demand is a necessary requirement to

consider the defendant to be in delay/default, such has not been complied with by the plaintiff since the former is not aware of any demand

[that] his [effecting] payments shall depend upon the lifting of garnishment effected by the Bangko Sentral on his accounts. Photocopies of defendant’s communication dated March 3, 2000 and April 7, 2000, with plaintiff are hereto attached as Annexes "F" and "G" hereof, as well as its demand to pay dated April 18, 2000. Demand by plaintiff is hereto attached as Annex "H" hereof. 50 [Emphases supplied]

made to him by the latter for the settlement of the whole obligation.

Finally, as to the amount of the outstanding obligation, PBCom alleged in paragraph 9 of the Complaint that the outstanding balance on the couples’ obligations as of May 31, 2001 was ₱21,576,668.64 for the first loan and ₱95,991,111.11, for the second loan or a total of

₱117,567,779.75.

In paragraph 9 of the Answer, however, Spouses Go, without stating any specific amount, averred that substantial monthly payments had been made, and there was a need to reconcile the accounting records of the parties.

Complaint

9. Defendants’ outstanding obligations under the two (2) promissory notes as of May 31, 2001 are:

P21,576,668.64 (Annex "A") and P95,991,111.11 (Annex "B"), or a total of P117,567,779.75. Copy of the Statement of Account is hereto attached as Annex "E" hereof. 51

Answer

9. Contrary to the plaintiff’s preference, defendant Jose C. Go has made substantial payments in terms of his monthly payments. There is therefore, a need to do some accounting works just to reconcile the records of both parties. 52

Clearly then, when taken within the context of the entirety of the pleading, it becomes apparent that there was no implied admission and that there were indeed genuine issues to be addressed.